Can you afford to have a mortgage on 16k?

Rw600

Hi
I want to buy a cheap house around 60-70k.
My salary is 16k.
I'm wondering if anyone on here has done anything similar.
I drive aswell and I'd be putting a 10k deposit down.

Thanks in advance

elephantrosie

not sure, but i think doable. well done for thinking ahead.

Chrysalis

yes given that a mortgage is cheaper than renting

ACG

It is only cheaper because interest rates are at an all time low. Lenders underwrite based on rates of around 6-7%. But yes it should be possible with many lenders.

00ec25

so on £16,000 salary you are left with £14,161 per year after tax (898) and national insurance (940) so £1,180 per month
http://www.moneysavingexpert.com/tax-calculator/

there are many online mortgage calculators you can use to see how much you can borrow and at what interest rate they will give a loan to you

using the Nationwide one for example based on a property costing 70k and you paying 10k deposit (don't forget you have to pay legal fees and other costs as well so you will need more than 10k of cash to start with) you can easily get a mortgage for 60k but at 3.6% interest rate
http://www.nationwide.co.uk/products/mortgages/our-mortgages/mortgage-calculators/mortgage-quick-quote

that would cost you £304 per month leaving £876 to spend on everything else....
- council tax
- electricity / gas
- TV licence
- phone contract & internet
- food
- car petrol, road tax, servicing
- life in general

alex_163163

I got a mortgage from nationwide 2.5 years ago for £50k, when I was earning £17k gross at the time. So it is doable.
I got a rate of 2.39% on LTV of 66%.
So my monthly payments were £197. Obviously that rate/ product might not be available now, but I think if you look around it might be doable with your budget. But yes, remember you need to factor in solicitors fees etc.

saajan_12

I suspect the issue here will be initial buying costs as these can be a significant proportion of the deposit at this level:
*solicitors
*surveys
*mortgage fee (can sometimes be added to the loan)
*mortgage broker fee (sometimes covered by the mortgage company)
*Stamp Duty (zero at this level, but I've included for completeness)

The above can eat into your savings and reduce your deposit, thus increasing your LTV needed. This can increase your interest rate or even make the lender unwilling to lend. So, get some quotes and budget for these costs to figure out your true deposit.

LadyL2013

Theoretically as long as you can afford the monthly payments with a comfortable enough cushion, then yes. The most you'll get loaned is about 5x your wage so £80k plus 10k deposit. You may be hard pushed to find a property that is liveable on that budget depending on where you live.

kmb500

Rw600 wrote: »

Hi
I want to buy a cheap house around 60-70k.
My salary is 16k.
I'm wondering if anyone on here has done anything similar.
I drive aswell and I'd be putting a 10k deposit down.

Thanks in advance

Yo, where do you live? A cheap house here is 250K...! I want to move to you!

Chrysalis

ACG wrote: »

It is only cheaper because interest rates are at an all time low. Lenders underwrite based on rates of around 6-7%. But yes it should be possible with many lenders.

Long term yes, but its becoming a worldwide trend now, I be surprised if they go up more than 1-2% within a decade.

Those in power have realised easily affordable credit helps the economy so they keep it flowing.